Quick Facts

Haiti’s economic freedom score is 55.8, making its economy the 124th freest in the 2018 Index. Its overall score has increased by 6.2 points, with dramatic improvements in fiscal health, property rights, and judicial effectiveness. Haiti is ranked 25th among 32 countries in the Americas region, and its overall score is well below the regional and world averages.

Poor economic management and crippling natural disasters have taken a terrible human and economic toll in Haiti. The effectiveness of public finance and the rule of law has been severely undermined by years of political volatility. Under the supervision of international donors, the government is working to increase domestic revenues and gradually eliminate fuel subsidies to fund reconstruction of hurricane damage and to improve public institutional capacity, upgrade infrastructure and public services, and support agriculture and rural development through better provision of credit and more carefully targeted subsidies.

Background

Haiti, the Western Hemisphere’s poorest country, is plagued by corruption, gang violence, drug trafficking, and organized crime. President Jovenel Moïse of the center-right PHTK party took office in February 2017, marking the end of a protracted election season and return to democratic order and political stability. The five-year term of former President Michel Martelly, also of the PHTK, expired in February 2016 with no elected successor. Martelly’s tenure was marked by political stalemate and accelerating deterioration of Haiti’s already dysfunctional democratic institutions. Challenges include reconstruction following Hurricane Matthew, which struck in October 2016, and continued recovery from the devastating earthquake that struck early in 2010. Twenty-five percent of Haiti’s people live in extreme poverty.

Land titles are frequently fraudulent. Real property interests suffer from the absence of a comprehensive civil registry. The judicial system performs poorly due to antiquated penal and criminal procedure codes, opaque court proceedings, lack of judicial oversight, and widespread judicial corruption. There has never been a successful conviction on drug trafficking or corruption-related charges in Haitian courts.

The top personal income and corporate tax rates are 30 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 13.7 percent of total domestic income. Over the past three years, government spending has dropped, amounting to 21.9 percent of total output (GDP), and the average budget deficit is down to 3.0 percent of GDP. Public debt is equivalent to 33.5 percent of GDP.

Haiti’s ongoing political instability has hurt the business environment. In 2016, Haiti made trading across borders easier by improving ports and improving an electronic data interchange system. Workforce safety has improved in recent years. Subsidies from foreign donors and the government have undermined opportunities for Haitian entrepreneurs, although in June 2017, the government did commit to removing retail fuel subsidies.

Trade is significant for Haiti’s economy; the combined value of exports and imports equals 72 percent of GDP. The average applied tariff rate is 6.6 percent. Nontariff barriers impede trade. Government openness to foreign investment is below average. The small, undeveloped financial sector does not adequately support the private sector. Most financial transactions are handled informally, and credit for new business ventures remains severely constrained.